by George Freeman
Infrastructure investment is essential to a coherent plan for growth and economic recovery. The economic crisis we face as a result of the collapse of Labour’s debt-fuelled boom is a stark reminder of our over-reliance on retail, housing and public sector spending and the scale of the challenge we now face in constructing a more sustainable model of economic competitiveness. We can’t borrow our way out of a debt crisis. We will have to trade our way out. With the Eurozone in meltdown, that will mean focussing our economy much more clearly on the developing world, and selling them the things they will increasingly need. As developing nations develop from subsistence to more advanced economies, they will evolve through a kind of Maslow hierarchy of needs from basic requirements like public health, agriculture and food, water and energy today to become, in the coming decades, markets for more sophisticated (Western) bio-medicines, sophisticated foods and clean energy. Our life science sector can play a key role in helping them achieve that transition, whilst driving investment into our science base, and support the UK's leadership in clean energy, biomedicine and food science, which is why I was delighted to be appointed Life Science Adviser last year and work on the Governments Life Science Strategy announced in December 2011.
We have much to be optimistic about. But we can’t build a 21st century innovation economy on 19th century infrastructure. Modern infrastructure is vital to our economic recovery. In fact I believe infrastructure is one of the five key strands to the modern industrial policy for innovation we need to drive our economic recovery. By (a) backing technology sectors where we have a genuine competitive advantage; (b) focusing on the fastest emerging global markets; (c) building infrastructure to support innovation ‘clusters’; (d) supporting a radical culture of entrepreneurship in Britain; and (e) entering more entrepreneurial global-UK collaborations with key nations, we can use this crisis to unlock a ‘New Victorian’ age of global UK growth.
Infrastructure is key to this not because it’s going to put millions of people to work with shovels in a Rooseveltian New Deal as some neo-Keynesians suppose. It’s needed because high speed communications are central to the knowledge economy, increasingly central to the new models of public service delivery that modern electorates expect and demand, and key to the ‘clusters’ of innovation and excellence which drive innovation.
As I know from my 15 year career starting, financing and running various start-up businesses in the Cambridge area, innovation doesn’t happen in vacuum. It happens increasingly in ‘clusters’, where concentrations of talent and ideas lead to innovative new product development. These can be at various scales. In neighbourhoods like London’s Tech City. In cities like Cambridge. Or in regions like East Anglia – treated for decades by planners as a rural agricultural backwater for commuters and retirees but rapidly coming to be seen as the ‘California’ of the UK Economy. By better linking the Cambridge biomedicine and IT hub with the Norwich cleantech and agri-science and Ipswich Telecoms cluster around BT, Martlesham we can unlock a new ‘golden triangle’ of high growth research based businesses, and help the UK lead the world in some key areas of agriculture, renewable energy, clean fuels, engineering and biomedicine. But it won’t happen without first class road, rail, air and broadband links. That’s why all the MPs in the region came together earlier this year to launch the East Anglian Rail Prospectus.
The Government ‘gets it’ and is rightly prioritising infrastructure as a core part of its growth and recovery mission. It has recently announced the biggest modernisation of our railways since the Victorian era, with £9.4 billion to be spent on railway upgrades across England and Wales. These include the provision of guarantees for up to £40bn of infrastructure projects among the 500 schemes in the 2011 National Infrastructure Plan, and the investment of £530m over five years to extend superfast broadband to 90 per cent of the population by 2015. The Government has also unlocked £20bn of private pension fund money to co-invest in infrastructure.
This all gives rise to some important questions about the right model of commercial co-investment to attract private capital to invest in public infrastructure. Post the scandals of PFI, what are the new models of ownership and leadership for channelling and co-ordinating this New Victorian renaissance of infrastructure? We need to find models of infrastructure investment which harness the benefits of private sector capital, management and innovation, without creating a raft of new quangos and messy ‘Public / Private Partnerships’. Let’s be bold.
Bold innovations are sometimes easier to pilot at a local level. That’s why I’ve suggested we look seriously at the idea of piloting an East Anglian Rail Company - reintegrating track and TOC on a regional basis to create an integrated rail company; combining the only real benefit of the nationalised railway (integration) with the benefits of private sector leadership, investment and innovation. With a long term franchise and control over track, trains and stations, and some development powers along the rail corridor, it could attract the very best management; secure the billions in new finance we need to fund new rail, train and station infrastructure, and help pioneer a coherent model of sustainable development along our rail corridors. Why not let the rail users and taxpayers of East Anglia have a stake in it?
Create a Regional Rail company like this, with a 20 year franchise and the ability to develop the rail corridor, and you create a FTSE 250 company overnight. And not just an integrated rail company but an engine of growth and technology transfer to help build the regional economy. So, we won’t rebalance the economy without massive investment in new transport infrastructure. Government can’t and shouldn’t pay for it. So let’s be bold in the area we can and create the viable structures to attract the private capital we need to modernise essential public infrastructure. We may need to be similarly bold in our thinking on roads, broadband, and airports. Out with the old thinking. Bring on the new.
This article has been published in the ResPublica Fringe magazine, a collection of articles and essays from our party conference partners.
George Freeman MP will be speaking at ‘Infrastructure and Investment Platforms for Growth’, a ResPublica public fringe event at Conservative Party conference: Tuesday 9th October, 8.00pm – 9.15pm, the ResPublica Marquee, the ICC Birmingham (secure zone).
ResPublica Fringe Magazine